Moratorium in Peril

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June 22, 2010

Judge may rule on deepwater drilling moratorium Tuesday

Posted: 09:18 AM ET

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CNN Wire Staff

(CNN) -- A judge in New Orleans may rule Tuesday on whether to lift the federal government's moratorium on deep water drilling in the Gulf of Mexico.

U.S. District Court Judge Martin Feldman has said he will give his decision between early Tuesday and Wednesday afternoon on whether to issue a preliminary injunction against the six-month ban, which halts all drilling in more than 500 feet of water and prevents new permits from being issued.

Brian Collins, an attorney for the Justice Department, insisted Monday that the suspension is necessary while officials conduct a safety review after the Deepwater Horizon explosion.

But a group of companies that provide boats and equipment to the offshore drilling industry filed a lawsuit claiming the government has no evidence that existing operations pose a threat to the Gulf of Mexico. They want a court to declare the moratorium invalid and unenforceable.


The office of Louisiana's governor has filed a brief supporting their case.

"This is environmental disaster. Let's not make an economic disaster," Henry Dart, an attorney for the state of Louisiana, said Monday.

Government estimates indicate as much as 60,000 barrels (2.5 million gallons) of oil may be flowing into the Gulf every day, and the gusher has already taken a serious toll on tourism and the fishing industry in Gulf Coast states.

Shane Guidry said his company, which provides support vessels for deepwater drilling, may have to make cuts.

"I'm very, very concerned. I can see this going on for 24 to 36 months. If that happens, we have no choice but to let people go. We have investors to think about, returns to think about," said Guidry, CEO of Harvey Gulf International Marine. "We're in survival mode right now, and we have to survive this."

The National Oceanic and Atmospheric Administration has closed 86,985 square miles -- about 36 percent of the Gulf's federal waters -- to fishing.

Kenneth Feinberg, who is overseeing BP's $20 billion escrow claims fund, is scheduled to meet with Alabama Gov. Bob Riley Tuesday.

He said Monday that he wants to accelerate the claims-payment process.

"We've got to get the claims out quicker, we've got to get them out with more transparency so claimants understand the status of their claim, and we've got to ease the burden on these folks in the Gulf," Feinberg said during an interview with John Roberts on CNN's "American Morning."

BP said in a statement Monday that costs from the disaster now total about $2 billion, including the cost of the response, containment, relief well drilling, grants to Gulf states, claims paid and federal costs. To date, more than 65,000 claims have been submitted and more than 32,000 payments totaling more than $105 million have been made, the company said.

BP, meanwhile, continues to struggle with its public relations efforts after the Gulf spill. Company CEO Tony Hayward, who was grilled during an appearance before Congress last week and then strongly criticized for attending a yacht race over the weekend, will not attend Tuesday's World National Oil Companies Congress in London, according to a BP spokesman.

The spokesman cited Hayward's "commitment to the Gulf of Mexico relief effort" as the reason for his decision not to attend the meeting.

A Kremlin source told CNN that Hayward was en route to Moscow Monday, but his whereabouts were unclear Tuesday.

The possible visit comes amid concern by Russian officials that BP may be planning to sell off some of its Russian assets to help pay for the Gulf of Mexico oil disaster.

TNK, a Russian company involved in a joint venture with BP, said it was not aware of Hayward's travel plans and had been assured by BP that the company did not intend to sell its stake in TNK-BP.

BP also has a stake in Russia's government oil company, Rosneft.

CNN's Anderson Cooper, Eric Marrapodi, Alan Silverleib and Matthew Chance contributed to this report.